"The NHS will last as long as there are folk left with the faith to fight for it"Aneurin Bevan

Monday, 9 May 2011

Lansley's Fantasy Figures

Over the weekend some people tweeted an article from Fraser Nelson of the Spectator about some bizarre figures that Lansley had published via a press release. Unfortunately the press release is not available online, so I have had to try and piece things together. Nelson gives part of the PR:

Lansley: Ed Miliband and Ed Balls would cut our NHS by almost £30 billionNew analysis of Labour’s NHS spending plans shows that Labour would have cut the NHS by £28 billion over the current Parliament. This is a cut of over £520 for every man, woman and child in the country.

This is a bit bizarre because as I have proven elsewhere Labour had planned to fund the NHS more or less the same as Osborne. That is, the Darling budget of 2010 pledged that the NHS funding for 2011/12 and 2012/13 would rise with inflation, which is what Osborne has promised. In addition, Labour said that there would have to be £15-20bn "efficiency savings" over four years and Lansley has said there will be £20bn "efficiency savings" over five years, so at best Labour would expect slightly less "efficiency savings" at £3.75bn per year than the Conservatives at £4bn per year. So the Tory claim that Labour would cut the NHS is a big fat lie.

So where does Lansley get this bizarre £28bn (rounded up to £30bn in the title, woohoo it must be great to have the power to round up by £2bn!) from? I spent some of yesterday and this morning trying to either get hold of the Press Release (no luck) or find out what the figure was calculated from. I struck lucky when a persistent Tory Troll on Twitter was making incoherent statements about NHS management (he calls the Health and Social Care Bill "a fantastic piece of legislation" so you can imagine that I don't pull my punches when I tweet with him). I asked him if he knew where the £28bn came from. He replied that it's "based upon Labour's actions in Wales".

OK, so here are the figures. In 2009/10 the Welsh NHS budget was £5.2bn and it cut £430m (note that in Labour Wales this is called a cut, in Tory England there has to be £4bn "efficiency savings"). The Welsh Labour administration say that they have to cut/save £435m per year for each of the next three years. That is, 8% cuts/savings. This is contrast to the 4% savings/cuts that the NHS has to bear in England (although Monitor says that hospitals have to endure at least 6.5% savings/cuts).

So this is what Lansley has done. He says that because Labour in Wales are making 8% cuts to the NHS, if Labour were in power now in the UK it would be making 8% cuts to the NHS in England. Errr, no, Labour would be implementing the £15bn-20bn "efficiency savings" just like Lansley is. I am not quite sure how Lansley gets £28bn from an 8% cut each year for four years, but frankly I do not care because it is totally made up. It is thoroughly dishonest for Lansley to extrapolate the Welsh NHS budget to England. The two systems are very different (Wales have free prescriptions, for a start!) and England already has its own cuts/savings programme.

So, on Wednesday, during PMQs, what are the bets that Cameron will raise this made up figure of £28bn? And more to the point, what are the bets that Labour will look clueless at Cameron and be unable to understand what he's talking about or how to respond?

UPDATE:
It appears that the Guardian have already analysed the Lansley figures and it appears that my Tory Troll was not correct. However, the Lansley figures are still dodgy.

What Lansley has done is taken Darling's settlement for the NHS and then extrapolated in a dishonest way. Here is what Darling said last year in his final budget:

6.13 In the 2009 Pre-Budget Report the Government made a clear commitment to protect key frontline public service priorities in 2011-12 and 2012-13 and announced that:

• NHS frontline spending – the 95 per cent of near-cash funding that supports patient care – will rise in line with inflation;

Lansley has produced a table assuming that Darling would increase funding in line with inflation right up to 2014/15. I have no issue with that. However, note that Darling said that 95% would be "protected" this way, what would happen to the other 5% (non-frontline, presumably administration and management)? Lansley assumes it would disappear! Yes, because Darling did not say how he would fund non-frontline spending, Lansley assumed that he wouldn't fund it at all. So there is a 5% cut every year for 4 years. Dishonest or what?

Here is the table from the Guardian website and note that the total is the 95% figure added to the Capital DEL discounting the other 5% completely.

Lansley also says that Labour pledged to half capital funding by 2014/15, but Osborne would maintain it (well, not quite). You can see the fall in Capital DEL in the table above. So this accounts for a total of £6bn less under Labour by 2014/15 than Osborne's settlement (but there is a catch).

But it does not stop there. One of Osborne's tricks was double counting. In the spending review he awarded a "real terms increase" to the NHS and then took roughly a billion away every year from the settlement to pay for social care (normally social care is paid for through the local authority budget). Guess which figure Lansley uses to show the "greater funding" by the Tories? Before, or after the £1bn has been taken off? Yup, before, so Lansley's figures are roughly £1bn per year more than they should be. This transfer of money from the NHS capital budget to social care amounts to £4bn cumulative by 2014. So rather than Labour's capital budget receiving £6bn less over the five years, it would receive £2bn less.

So in summary Lansley's figures are wrong in two aspects. First they do not include the transfer from the NHS capital budget to social care so this knocks £4bn off the extra £6bn that Osborne's capital budget would have over Darling's (assuming Darling would have halved the capital budget). So that means that Osborne would have given £2bn more in the capital settlement. The other place where Lansley is wrong is that he assumes that Labour would reduce spending by 5% every year for no reason whatsoever. We do not know how Darling would have funded the 5% non-protected budget, but he would not have cut it completely. If we assume a rise with inflation for the 5% then the total difference between Darling and Osborne would have been £3.7bn to Osborne's favour (total over 5 years). So not a £28bn difference but a £3.7bn difference. yet another Tory Lie!